Are All Debts Treated Equally in Bankruptcy?
Unless you’re an experienced debt defense attorney, you may not know exactly how your debts will be treated during bankruptcy. It’s important to understand that not all debts are treated equally, so before you file for Chapter 7 or Chapter 13 bankruptcy, working with an attorney to determine a strategy is beneficial in many ways. Most debts can be included when filing for bankruptcy in Texas, but it doesn’t mean they will all be discharged. Here’s what you need to know about how certain debts are treated in bankruptcy.
Priority Debts May Not Be Discharged
The most common priority debts include vehicle loans, mortgages, tax penalties, child or spousal support, tax liability, student loans and more. In most cases, these debts will not be discharged and will take priority over all other types of debt you may have. There are various strategies you can take, depending on whether you file for Chapter 7 or Chapter 13 bankruptcy. These strategies can include setting up a payment plan to pay down the debts or restructuring loans to make them more reasonable to pay down.
How Tax Debts Are Treated in Bankruptcy
Tax debts generally are not discharged, but they can be if certain conditions are met. Every tax debt situation is unique, which makes it extremely important to work with a Houston debt defense attorney from the very beginning. The attorney will review your debts entirely before filing for bankruptcy in Texas and will determine the best strategy for having your tax debts discharged.
Upside Down Debts
These debts are when you owe more on a home or vehicle than what it’s actually worth. Your debt defense attorney may be able to modify the terms of the loan to either reduce the amount owed or shorten the loan terms entirely. Again, the strategies available depend on whether you file for Chapter 7 or Chapter 13 bankruptcy, and your attorney will decide which is the best route to take.
Work With A Debt Defense Attorney
As you can see, various types of debts are treated differently when filing for bankruptcy in Texas. When you work with a Houston debt defense attorney before filing for bankruptcy, you can have a solid strategy and plan in place. Filing for bankruptcy is stressful enough, and you can avoid unnecessary stress by relying on the expertise of your attorney to put you in the best situation possible.
Bryeans & Garcia, PLLC has helped hundreds of clients file for bankruptcy. Before we do so, we will evaluate your entire situation thoroughly to ensure the most appropriate course of action is taken in your benefit. Our goal in every case is to get our clients’ normal lifestyle restored as quickly and as stress-free as possible. To schedule a consultation at our Houston or Ft. Worth offices, contact us today.